Microsoft has donated some drivers to Linux. It's to their advantage to do so. This isn't code to make Linux better in some way that benefits everyone.
Ina Fried has it right:

But lest anyone think Microsoft suffered a massive head trauma over the weekend, the code it is releasing isn't really about helping Linux compete better with Microsoft. The drivers are really geared at making Windows a better host for Linux.

"The Linux device drivers we are releasing are designed so Linux can run in enlightened mode, giving it the same optimized synthetic devices as a Windows virtual machine running on top of Hyper-V," Tom Hanrahan, director of Microsoft's Open Source Technology Center, said in a statement. "Without this driver code, Linux can run on top of Windows, but without the same high performance levels."

Microsoft wants Linux to run on Windows, in short. So remember what comes after the 'Embrace' part.

In case you had any doubt about the true motive, please note that the Microsoft announcement offers a link to video of Microsoft's Tom Hanrahan discussing the move with Sam Ramji. But to view it, you have to have or install Microsoft's proprietary Silverlight. There is no Microsoft Silverlight for Linux. They provide a transcript, though, of an interview with them, and here's why they are doing this, according to Ramji:

We are hearing more and more customers and open source partners telling us they see some of their best value when they deploy new open source software solutions on top of existing Microsoft platforms.

So this is about not losing customers to Linux. And ultimately to replace it, if they can. That's the 'Extinguish' part.

Here's the press release, for historians:

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REDMOND, Wash., July 20, 2009 — Today, in a break from the ordinary, Microsoft released 20,000 lines of device driver code to the Linux community. The code, which includes three Linux device drivers, has been submitted to the Linux kernel community for inclusion in the Linux tree. The drivers will be available to the Linux community and customers alike, and will enhance the performance of the Linux operating system when virtualized on Windows Server 2008 Hyper-V or Windows Server 2008 R2 Hyper-V.

Sam Ramji is responsible for developing sustainable partnerships with open source communities as part of his role as senior director of Platform Strategy in Microsoft’s Server and Tools organization. This includes overseeing the operation of Microsoft’s Open Source Technology Center (OSTC), which serves as a landing point for open source communities and companies interested in working with Microsoft, as well as a resource for Microsoft product groups interested in open source technology. Tom Hanrahan, who also plays a critical role in Microsoft’s day-to-day open source interoperability efforts, is the director of the OSTC. His team played a key role in the development of the drivers, and will manage their ongoing enhancement.

PressPass spoke with Ramji and Hanrahan to find out more about today’s announcement.

PressPass: Microsoft has gone to great lengths to engage the open source community. How does today’s news play into Microsoft’s overall open source strategy?

Ramji: We are seeing Microsoft communities and open source communities grow together, which is ultimately of benefit to our customers. The Linux community, for example, has built a platform used by many customers. So our strategy is to enhance interoperability between the Windows platform and many open source technologies, which includes Linux, to provide the choices our customers are asking for.

A central part of our strategy is the work done in the OSTC, which we opened about three years ago. The OSTC has a deep technical expertise in Linux, UNIX and open source technologies, along with strong social connections into open source communities. We have learned a great deal from the various community leaders about how to effectively work together, and are eager to continue the dialogue.

Our work in this area is all about providing more flexibility and choice, and requests from our customers and partners were really the impetus behind those efforts. We are hearing more and more customers and open source partners telling us they see some of their best value when they deploy new open source software solutions on top of existing Microsoft platforms. Today’s release would have been unheard of from Microsoft a few years ago, but it’s a prime example that customer demand is a powerful catalyst for change.

PressPass: So what exactly are you releasing today?

Hanrahan: Today we’re releasing Linux device driver code to the Linux kernel community. This is a significant milestone because it’s the first time we’ve released code directly to the Linux community. Additionally significant is that we are releasing the code under the GPLv2 license, which is the Linux community’s preferred license.

Our initial goal in developing the code was to enable Linux to run as a virtual machine on top of Hyper-V, Microsoft’s hypervisor and implementation of virtualization.

The Linux device drivers we are releasing are designed so Linux can run in enlightened mode, giving it the same optimized synthetic devices as a Windows virtual machine running on top of Hyper-V. Without this driver code, Linux can run on top of Windows, but without the same high performance levels. We worked very closely with the Hyper-V team at Microsoft to make that happen.

PressPass: How will customers benefit from the Linux device drivers?

Hanrahan: Many customers are looking into how virtualization can reduce the cost of deploying and managing their IT infrastructure through server consolidation and more efficient use of server resources.

Customers have told us that they would like to standardize on one virtualization platform, and the Linux device drivers will help customers who are running Linux to consolidate their Linux and Windows servers on a single virtualization platform, thereby reducing the complexity of their infrastructure.

Consequently, they’ll have more choices in how to develop and deploy solutions, while still managing their entire data center from a single management console.

PressPass: What motivated Microsoft to do this?

Ramji: The current economic climate has a lot of companies consolidating their hardware and software assets, deferring new software and hardware purchases, and reducing their travel and training expenses — doing everything they can to cut controllable costs to the bone and get the most out of what they’ve got so they can hang onto their skilled staff.

Many companies are turning to Microsoft more frequently to help them succeed in a heterogeneous technology world because we understand that reducing complexity is a key factor to reducing cost. We are seeing interoperability as a lever for business growth.

So there’s mutual benefit for customers, for Microsoft, and for commercial and community distributions of Linux, to enhance the performance of Linux as a guest operating system where Windows Server is the host.

PressPass: What are some other examples of Microsoft’s work with open source?

Ramji: Many people are surprised when they hear how much open source community and development work is happening across Microsoft. This probably has a lot to do with the fact that we’re focused on getting the work done, and engaging with communities on a one-to-one basis, rather than promoting it. We currently participate and collaborate on a number of open source projects through contributions of technical support and code.

Examples can be found in the work we have done with the PHP Community, which has involved contributing to the PHP Engine, optimizing PHP 5.3 to perform strongly on Windows, and working to improve the performance of numerous PHP applications on Windows. Then there is the ongoing participation in various Apache Software Foundation projects, such as Hadoop, Stonehenge and QPID. In addition to this, we worked to improve interoperability with Axis2 and provided support to the Firefox community to optimize Firefox for Vista and Windows Media Player.

Examples like these can be found scattered across the company, so there will continue to be many more on the horizon.

PressPass: What’s Microsoft’s road map for working with open source communities three to five years down the road?

Ramji: We’re focused on building sustainable business strategies for open source at Microsoft.

Stemming from that we see open source playing into three key areas, one of which is the use of “inbound” open source and the open source development model to make our software development processes more efficient. Good examples of this include what we did recently with jQuery in Visual Studio 2008, the implementation of OpenPegasus connectors and adaptors into System Center Operations Manager, and work that the Microsoft High Performance Computing team did with the Argonne National Lab (ANL) to source its MPICH2 implementation, which is a portable implementation of the Message Passing Interface (MPI) used in cluster computing and super computers.

Another area is product evangelism — engaging people to adopt our technologies. For the past 34 years Microsoft has had an open-edge strategy where we provide open application programming interfaces and software development kits. Open source is the next level in our effort to create broad platform adoption. An example of that is the AJAX Control Toolkit. Our efforts in interoperability are also part of Microsoft’s product evangelism process, such as giving Windows functionality more visibility through PHP applications.

The third area is using open source to reduce marketing and sales costs or to try out new features that highlight parts of the platform customers haven’t seen before. The open source educational tools recently released for Microsoft Office are a great example. Specifically, the add-ins for mathematical and chemical notation are enabling teachers and students to see that they can use Office for a range of new things they weren’t aware of. In addition to using LaTeX, a powerful but complex documentation preparation system, to lay out mathematical problems, teachers are seeing the new value they can get out of Microsoft Word.

As open source is adopted on a range of platforms, understanding, engaging and supporting open source development will continue to be fundamental to enabling more customer choice.